A reader named Marc recently said asking how our high deductible health plan did out for us. Given that November is open enrollment season, this is a really timely question, so I thought I’d tackle it which includes a dedicated post.
In short, we’ve been thrilled with all the HDHP (and the associated HSA) offered through my employer – though it’s vital that you keep in mind that plan details vary widely, as do individual circumstances. Put simply, it’s important to check the details for your own benefit, and to make your own decision.
In our case, we have a very $3000 family deductible vs. $900 whenever we stuck with the old PPO plan. To put it differently, we’re facing a possible difference of $2100 on the subject of meeting our deductible. The HDHP has the benefit of a higher annual “stop loss” ($6k vs. $2k) but, given the structure of the benefits (we pay just 10% with the usual and customary rate [UCR] once our deductible is met) it would take some pretty extraordinary bills to get hurt by that.
The balance within the plans is very similar, though the PPO does offer a $20 per office visit copay, which doesn’t go toward the deductible, and really works out to at least double our 10% of UCR payment together with the HDHP, so that’s a point in favor of the HDHP. And speaking of points favoring the HDHP… Our plan also gives us access to a health savings account (HSA). Not just that, by my employer has been incentivizing this treatment solution by matching a portion individuals contributions.
Now for the big one… The premiums. Obviously, the HDHP has lower premiums a result of the lower level of coverage. But what exactly is it enough to make a difference? Yes, by a long shot. When we first opted, we were saving $370/month by using the HDHP as opposed to PPO. That’s $4440/year, which is far more than the difference in deductibles, and would actually cover an attractive chunk of the stop loss difference once we were to need it.
This year, the monthly difference is really closer to $390, so we’re saving all-around $4700/year in premium payments — all when planning on taking on an extra $2100 in deductible, better terms (10% UCR in place of $20 office visit copay) once our deductible has become met. Plus, we get to stuff over $6k/year into an HSA (and don’t ignore that employer match!), which is effectively an extra tax advantaged investment account. Oh, and don’t you can forget those matching contributions.
In short, in each years we’ve had the HDHP, we saved thousands (and thousands!) of dollars covering the old school PPO plan. And yes, we’ve hit our deductible within years. In fact, we hit it in the first six months in both cases, but we’re still making out like bandits. Remember, we have four kids, so things mount up quickly.
Why? I’m guessing that consumer behavior changes beneath a pay-as-you-go model, with the high deductible making people unlikely to seek medical treatment for minor, everyday maladies which might otherwise send them running to Urgent Care. This could result in lower healthcare costs, which equals cheaper insurance.
Not surprisingly, I yet again opted for the HDHP and am longing for stuffing another year’s valuation on contributions into our HSA.